Winslow v. Baltimore & Ohio R. Co. 188 U.S. 646 (1903)

U.S. Supreme Court

Winslow v. Baltimore & Ohio R. Co., 188 U.S. 646 (1903)

Winslow v. Baltimore and Ohio Railroad Company

No. 125

Argued December 17-18, 1902

Decided February 23, 1903

188 U.S. 646

Syllabus

A lease containing a covenant to renew at its expiration with covenants, terms and conditions similar to those contained in the original lease is fully carried out by one renewal without the insertion of another covenant to renew. Otherwise, a perpetuity is provided for, and this the court will not presume in the absence of plain and peculiar language.

Where land is owned by three trustees under a trust requiring an exercise of the judgment and discretion of all the trustees, and there is no evidence of authority for one of them to act alone, the execution of what purports to be a lease for five years by one of the trustees does not make a valid lease of the property, nor does it affect the share of the trustee executing it as in the case of ordinary joint tenants, and where all the trustees do not join in the execution of an instrument, the burden is on the grantee to prove the deaths of those not joining therein. Recognition or ratification by the other trustees cannot be assumed unless it is shown to have been founded upon full knowledge of all the facts.

The receipt of rent by the beneficiary under the trust directly from the tenant will not amount too part performance of the contract in such manner as to make it binding upon the trustees not signing when it appears that the check received for such rent was not endorsed by the trustee

and there is no proof that the beneficiary knew there was no binding lease in existence, but it does appear that subsequently rent was refused and only accepted under an agreement that the acceptance was without prejudice.

Where a lease contains an option to the lessee to purchase at a price named in the lease during the continuance thereof and the trustees making the lease have no general or absolute power of sale, specific performance of that portion of the contract should be denied.

Where a railroad company has built its line on land affected by such a lease, and the trustees have commenced an action to recover rent for the period of occupancy subsequent to the expiration of the lease, and also to recover possession of the property, there is no ground for an injunction against the prosecution of the action as to the recovery of the rent; it is proper, however, for this Court to enjoin for a reasonable period, in order to permit condemnation proceedings to be instituted and prosecuted, that portion of the action which is an attempt to oust the railroad company from land upon which it has entered with a view to its purchase and constructed its road thereon for public purposes under the sanction of public authority and over which the public have rights which should not be obstructed or destroyed either by the company itself or by antagonistic parties claiming ownership as a result of a private agreement.

The Court of Appeals of the District of Columbia, reversing the judgment of the Supreme Court of the District (which dismissed the bill of the railroad company), directed that court to give judgment in favor of the company, and from the judgment of the Court of Appeals an appeal to this Court has been taken by the defendants below.

The company brought this suit to obtain a judgment declaring the validity of an alleged lease to it for five years from the first day of August, 1897, and to compel the specific performance of an alleged contract to sell to it the same land mentioned in the lease and lying in the City of Washington, owned by the defendants as substituted trustees under the will of the late Catherine Pearson, deceased, and to enjoin the defendants from continuing proceedings at law which they had commenced to obtain possession of the premises, and also to enjoin them from the prosecution of an action to recover damages for the use and occupation of the land by the railroad company. The facts are as follows:

Catherine Pearson, in her lifetime, owned certain land, consisting of unimproved lots in the City of Washington, near the Baltimore & Ohio Railroad Company's depot, and lying on the line of its Metropolitan branch as subsequently constructed in that city. After the decease of Mrs. Pearson, and on June 30, 1868, her will was duly proved before the proper probate court in the District. In it, she devised the premises to trustees for the sole and separate use of her daughter, Eliza W. Patterson --

"During the term of her natural life, and so that the same shall not be liable for the debts or subject to the control, contracts, or engagements of her present or any after-taken husband; to permit her by herself, or her special attorney appointed in writing, to be signed by her, to receive the annual income and profits of the same for her own sole and separate use, her receipt or that of her attorney so appointed as aforesaid alone to be an acquittance to the person or persons charged with the payment of such income or any part of the same, and to the extent only therein expressed to have been paid, and if she pleases to occupy, possess, and use for her own account, accommodation, and convenience and that of her family any part of the property, real and personal, so held for her separate use and benefit, she shall be allowed to do so, and if at any time the said Eliza Patterson shall in writing, to be signed by her in the presence of and to be attested by a subscribing witness, desire the said Carlisle P. Patterson, William H. Philip, and Walter S. Cox, or the survivors and survivor of them, to sell any part of the estate, real and personal, held by them for her separate use, for the purpose of changing the investment thereof, it shall be lawful for the said named trustees or the survivors or survivor of them to sell the same for such purpose only, and to transfer and convey the absolute estate in fee therein, to the purchaser thereof; to receive the proceeds of any and every such sale of the purchaser, who shall not be required to see to the application thereof, and to invest the same in such manner as the said Eliza W. Patterson may require, and such new investment shall be held by the said trustees for the same use, trusts, and purposes, and with the

same powers and authority of sale and reinvestment, as is herein declared of and concerning the original trust, subject, and separate estate."

"And after the death of the said Eliza W. Patterson, the said named trustees and their successors shall hold the said trust, subject, and separate estate -- original and subsequently acquired by sale and reinvestment -- for the use and benefit of any child, or children, of the said Eliza W. Patterson, and the issue of any child or children of the said Eliza who may die leaving issue in the lifetime of the said Eliza, and such issue shall take the share or portion of the said estate which their parent or parents would have taken had they survived the said Eliza. And if the said Eliza W. Patterson shall die without leaving a child or children, or issue of any child or children, living at the time of her death, the said trustees and their successors shall hold the said trust, subject, and separate estate for my right heirs. And if it shall happen that either of the said trustees shall die, or become incapable of acting, or shall refuse to act in the execution of said trust, then and in every such case the continuing trustees or trustee shall from time to time nominate some other person or persons to be approved by the said Eliza W. Patterson to be trustee or trustees in the place and stead of the person or persons so dying, or becoming incapable or refusing to act, and shall convey and settle the said trust, subject and separate estate in such manner that the same shall be legally vested in such continuing trustees or trustee, and such person or persons so named and appointed to that office for the same uses, trusts, and purposes, and with the same power and authority of administration, sale, and reinvestment as is hereinbefore declared of and concerning the said trusts, subject, and estate, and the said new trustee or trustees shall have the same power to act in the premises in conjunction with the continuing trustees or trustee, and as survivors of them, as if they had been originally named trustee or trustees in the premises in this my last will and testament."

"I do hereby nominate and appoint Carlisle P. Patterson, William H. Philip, and W. S. Cox to be the executors of this my last will and testament. "

In 1872, the trustees under Mrs. Pearson's will leased to the railroad company the land for five years, the lease containing a privilege to the railroad company to purchase such land during those five years on payment of $12,592. It also contained an agreement to renew the lease with the same covenants and privileges for another term of five years, or until the lessors were prepared to convey the premises as agreed in the lease with a perfect title in fee simple.

From the time of the first lease in 1872, and under various leases thereafter, the company occupied the land, constructed part of its branch line thereon, and paid rent therefor up to 1888. On January 30 of that year, a lease was made, which was signed by the trustees and by the president of the railroad company, though not by Mrs. Patterson. By the terms of that lease, the premises were rented for five years from August 1, 1887 at the same rent and with the same covenants as to renewal and for the sale of the lands as contained in the first lease of 1872. The company continued in the occupation of the premises under this lease for the five years mentioned therein. Upon October 17, 1892, the company still being in occupation of the land, another instrument was executed in the form of a lease, signed by but one of the trustees, and purporting to lease the land for five years from August 1, 1892 at the same rental as the lease of 1888, and with the same covenants to sell at the same price ($12,592), and to renew the lease for five years, as contained in the lease of 1888. This lease was signed by Winslow, alone, he then being one of the substituted trustees, but Jay, another of the substituted trustees, did not sign it, and, so far as appears, never saw it. These two substituted trustees had been duly appointed prior to or in the year 1883. The former trustee, Judge Cox, had resigned in June, 1892, and it does not appear that his successor had then been appointed.

The company retained possession of the property from August 1, 1892, up to August 1, 1897, and paid the amount of money mentioned in the paper of 1892, being at the same rate that had been paid since 1872, and as was provided in the lease of 1888. About the first of August, 1897, questions arose as to the terms of future occupation of the land. The trustees refused

to execute any further lease, denied any obligation to renew it for any term, and said they preferred to sell, but refused to do so on the old terms, the land having in the meantime largely appreciated in value. In September, 1897, Mr. Winslow, in a letter to the company, said they were prepared to convey the property with a perfect title, and that they also preferred to execute such conveyance to any renewal of the lease. The company, however, prepared a lease, which provided for again leasing the land to it on the same terms for a period of five years, commencing on August 1, 1897, and this lease also contained a provision for a renewal for another five years, or until the lessors could convey the premises in fee simple to the company. This lease was never signed. Negotiations continued in regard to the matter, the company insisting it had the right to a renewal of the lease by virtue of the instrument dated August 1, 1892, while the trustees denied that contention, and, though willing to sell, were not willing to do so at the price named in the former lease, as they said that the value of the land had increased from $12,592 to over $30,000. During these negotiations and disputes, the company retained possession of the land, and on or about February 1, 1898 (the dispute and the negotiations between the trustees and the company being still unsettled), in accordance with the custom which it had followed during the running of the various instruments since 1872, of paying the rent semi-annually on the first days of February and August as it accrued, it sent the money that would have been due for rent (if a lease were then in existence), in the form of a money order payable to the order of Mr. Winslow, trustee of Eliza W. Patterson, and enclosed it in a letter addressed to Mr. Winslow, in care of Fisher & Co., agents, who sent it to Mrs. Patterson, as Mr. Winslow was then absent in Nicaragua as secretary of the Canal Commission. This money order was received by Mrs. Patterson, who thereupon wrote the following letter, under date of February 5, 1898, to one of the officers of the company:

"Dear Sir: I returned to you a few days ago the draft which you sent me for the rent of my property on First Street,

Washington, by the railroad company of Balto. & Ohio of $377.77. The draft was made out to Mr. Francis Winslow, trustee, and I could not draw it as Mr. Winslow is in Nicaragua, and I could not send it so far away to him, fearing it might be lost. I therefore return it to you with the request that you would sign it, as you always have done heretofore, Cox, Jay & Winslow, trustees. Judge Cox & Mr. Jay are both here, so that they can sign it at once and I can have the money. By giving prompt attention to this small matter of business you will greatly oblige,"

"Eliza W. Patterson"

The statement in this letter that Judge Cox could sign the draft or order was evidently a mistake, as his resignation had been accepted by the court years prior to the date of the letter.

The company afterwards sent back the draft, and, under some arrangement between Mrs. Patterson and Fisher & Co., which it does not appear was known by the trustees, but which was consented to by the company, the same was indorsed "Francis Winslow, trustee, by Thomas J. Fisher & Co., attorneys," and on such indorsement the money on the voucher was obtained from the company and received by Mrs. Patterson.

On August 1, 1898, the company sent a draft or money order for $377.77, the amount of rent which would have been due if there had been a valid lease in existence, the draft being sent to Mr. Winslow, trustee which he declined to negotiate, and insisted that the rights of the company had been terminated by his notice prior to and in September, 1897, and that, since that time, the company had been occupying the property as tenants by sufferance.

This voucher, and those which succeeded it, and which were forwarded to Mr. Winslow, as trustee, and made payable to his order, were retained by him until January, 1900, when they were returned to the company and a check given for the aggregate amount under an agreement that its acceptance should be without prejudice to the rights of the respective parties and their claims relating to the leasing of the land or

the renewal of the lease, or to any question or matter connected therewith.

The dispute between the parties continued, as also did the negotiations in regard to a settlement thereof, until some time in March, 1900, when Mr. Winslow, Mr. Jay, and the American Security & Trust Company, the substituted trustees, took proceedings against the company before a justice of the peace to obtain possession of the premises, based upon a notice to quit, given under the statute. Judgment in favor of the trustees was rendered in that case by default, and an appeal by the company, as provided for by law, was prosecuted, and was undetermined at the time of the commencement of this suit. On August 15, 1900, the substituted trustees also commenced an action against the company for the use and occupation of the premises from August 1, 1897, to April 16, 1900, claiming $6,500, with interest from the last-named date. Soon thereafter, the company commenced this suit asking for a judgment that the company was entitled to a lease from August 1, 1897, for five years, and also for a judgment for specific performance of the contract to sell, and obtained an injunction restraining the prosecution of both of the proceedings above mentioned.

The trial court held that there had been no valid contract for a sale, and that there was then no valid lease in existence such as was required to be proved before a court of equity would decree specific performance. The court expressed no opinion as to the effect of continued occupation after the expiration of any lease under the facts in the case with reference to the amount of the rental to be paid. That was a matter which it was held could be determined on the law side of the court. A decree was therefore entered dismissing the bill and dissolving the injunction which had been granted.

The Court of Appeals reversed the judgment of the trial court and remanded the case, and in its opinion it was stated as follows:

"In view of what has been said, we are of opinion that, under the provisions of the lease of 1892, executed by Francis Winslow, trustee, for and on behalf of the life tenant, Mrs. Eliza W. Patterson, the appellant was and is entitled to one

renewal of such lease for the term of five years from and after the first day of August, 1897, upon the terms and conditions of said lease as to the rents to be paid therefor, and that, during the continuance of such term, no suit for the dispossession of the appellant can be maintained. We are also of opinion that, for the time subsequent to the determination of said renewal lease for which the appellant shall require the use and occupation of said land, the appellant is entitled, and it is its duty, to acquire the right to such use and occupation under the exercise of the right of eminent domain conferred upon it by the act of Congress, by the ascertainment of the value of such use and occupation, and payment to the owners of the land of the just compensation so to be ascertained. And the bill of complaint in this cause may be retained for the purpose of such ascertainment of value and just compensation. It follows that the decree of the Supreme Court of the District of Columbia dissolving the injunction granted in this cause and dismissing the bill of complaint must be reversed, with costs, and that the cause will be remanded to that court with directions to vacate said decree, to restore the injunction and make the same perpetual, and for such further and other proceedings as may be just and proper according to law and in conformity with this opinion, and it is so ordered."

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